Microsoft Pushes Partner Opportunity for Online Services

The company unveiled initiatives and programs aimed at clarifying the partner opportunity around its Business Productivity Online Suite and that show a clear path to profitability.

At its partner conference on Monday, Microsoft dipped into its arsenal and
rolled out a combination of new tools, incentives and clarified messaging to
help shed greater light on the partner opportunity around the Business
Productivity Online Suite (BPOS) of services.

"I hope we can debunk some of the myths that have grown up around BPOS,"
said John Betz, director of Online Services at Microsoft.

Since last year, partners have wanted answers when it comes to Microsoft’s
software-plus-services play. Initial excitement at the introduction of BPOS had
begun to dampen as questions swirled about the nature of the partner business
model. Among the complaints? Partners worried that the resale margins on BPOS
subscriptions did not constitute a true recurring revenue stream, and that
Microsoft, because it would own the customer billing and payment process, had
too much control.

"The cloud initiative has been a big unknown with nothing concrete," said
Brian Jaenisch, Microsoft partner business development manager at Marco, an
integrator in St. Cloud, Minn.
"Going forward, what’s to say that Microsoft couldn’t say that the 12 percent
and 6 percent [margins on BPOS resale] we’re getting now we aren’t getting
anymore? Then what’s left in it for us?"

On Monday, Microsoft took steps to change perceptions. First off it
introduced the Order on Behalf system. This system enables a partner to embed its
Microsoft partner program identification code into the quote that it sends the
customer when selling BPOS. When the customer follows the link, entering
contact information that will enable them to trial BPOS or actually subscribe,
the partner automatically gets credit for the deal.

The new Commerce Dashboard further safeguards the partner’s connection to a
particular BPOS customer. This extension to the general partner portal
lets a partner log in and see an aggregation of all the BPOS customers doing
trials it has in progress, which customers have subscribed, what the partner’s
cut of the subscription fee is and when a customer is up for renewal.

The third new initiative, called Quick Trials, simplified the process for
the end customer, reducing the registration process from 71 steps to 19, Betz
said.

Because customer ownership is a sore spot for partners, Microsoft, as one of
its upcoming changes to the BPOS model, is going to allow partners to include
their brand information alongside Microsoft’s on the bill that goes out to the
customer—again, with the goal of keeping them visible, Betz said.

From an incentive standpoint, Microsoft is allowing partners to work with
BPOS directly by giving them access to 250 seats to use internally. Partners that
make a commitment of selling BPOS to at least eight customers with more than 25
seats will also gain access to additional training and resources.

To date, Microsoft has 5,000 partners signed up with BPOS. And the company
has been encouraging partners to go beyond the simple resale of subscriptions
to create lucrative services practices around BPOS and Sharepoint Online and
Exchange Online services.

Betz said 100 partner-based solutions have been built on top of BPOS using
Web extensions that allow the services to be customized for a customer.